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Biden Energy Dept. Report Admits Cancellation of Keystone XL Pipeline Cost Multitude of Jobs

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OPINION: This article may contain commentary which reflects the author's opinion.


On President Joe Biden’s first day in office, he signed a stack of executive orders and actions, one of which was a reversal of a Trump-era policy authorizing the construction of a major new oil pipeline designed to further America’s energy independence.

When Biden canceled the Keystone XL pipeline, a concept that had been an on-again, off-again project sponsored by a Canadian company since 2008, critics at the time bemoaned the fact that the U.S. would again become reliant on volatile foreign sources of oil. But more than that, they noted that, during a pandemic-induced economic slowdown, ditching the project would cost tens of thousands of jobs — something the administration and so-called “fact checkers” attempted to debunk.

Late last month, however, the Energy Department noted in a little-publicized year-end report to Congress that, while “the high-end figure overstates jobs,” some studies showed between 16,149 to 59,468 jobs, many temporary, as being lost by the cancellation.

In addition, the report “estimated that the construction of the KXL pipeline would contribute $3.4 Billion (or 0.02 percent) to the United States Gross Domestic Product.”

The pipeline aimed to carry heavy crude from the Alberta oil sands in western Canada to the Gulf of Mexico, but in his executive order, Biden claimed the project “disserves the U.S. national interest.”

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In the report, the DOE said Biden also noted in his executive order that “its construction and operation would not be consistent with U.S. climate goals and it would undermine the global energy and climate leadership role of the United States.”

The estimates were taken from a 2014 Supplemental Environmental Impact Statement.

“Construction jobs would be more significant but temporary; if construction were to take two years, about 3,900 direct jobs would be created annually during construction, and 21,050 U.S. total jobs would be created, counting indirect and induced jobs,” the report stated.

“Other estimates for temporary jobs during the construction phase ranged from 16,149 to 59,468 annually for a two-year period. However, the study includes segments of the Keystone pipeline that were not related to the XL portion and jobs corresponding to those sections that were built were realized,” the report continued.

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“Additionally, the high-end figure comes from this study which faced significant criticism for including in its analysis project inputs from India, Russia, and Russian companies in Canada, thus including jobs outside the United States,” it said.

But the project was about more than just jobs — it was about national security and ensuring a cheap, steady, plentiful supply of energy for Americans, though Biden, in early 2022, claimed the issue was out of his hands, blaming then-spiking oil and gas prices on Russia’s invasion of Ukraine.

While it’s not likely that the Keystone project would have been operational by then, Biden’s cancellation of it and his government’s imposition of a new regulatory regime on the oil industry in general sends a message that investing in future capacity is not in the best interests of the oil companies for now.

“Biden’s reversal of the cross-border permits for the pipeline kicks off a regulatory onslaught on the petroleum industry’s value chain, with unprecedented breadth, assertiveness and tangible investment impacts. Though this reversal won’t damage the oil industry much, and it isn’t absolutely essential to American oil right now, there are long-term consequences to this decision,” Robert McNally, president of Rapidan Energy Group, a Washington, DC-based energy consulting firm, and a former adviser to President George W. Bush, wrote in February 2021, shortly after Biden took office.

“Oil’s next price boom will scramble industry and political priorities. The price and supply security of oil will go right to the top. Oil is, after all, the lifeblood of modern civilization,” he continued. “And our dependence on oil is going nowhere fast, no matter how fast electric vehicles arrive.”

“…[H]history repeatedly shows that Washington goes into crisis mode and wonkery goes out the window fast when pump prices rise. So when the cost of oil heads back to $100 amid rising dependence on the Arabian Gulf, Biden’s day one cancellation of a significant pipeline from our largest source of energy imports will be viewed as a much more controversial step than it is today,” McNally added.

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